Water Industry Competition Act 2006

The Act affects:

• Private operators and retailers seeking to enter the NSW water and sewerage market, who must obtain the relevant approvals and licences before operating.
• Property developers who may seek to construct private water or sewerage infrastructure for developments, particularly recycled water schemes and sewer mining operations.
• Small retail customers (residential and small business users) who are protected by the Act's consumer protection provisions and last resort arrangements.
• Access seekers who wish to use existing significant water infrastructure to provide competing services, under the Part 3 access regime.
• Public water utilities (Sydney Water, Hunter Water, Water NSW) whose infrastructure may be subject to access declarations.
• IPART as the compliance, auditing, and pricing regulator.
• Persons carrying out works on or near water infrastructure, who must comply with the Part 6 infrastructure work requirements.
• Investors and lenders in water industry assets, for whom section 64's ownership and the Conexa case's interpretation as "interest in land" is commercially significant.

Construction and operation (Part 2): A person must not construct, install, or alter regulated water industry infrastructure except under a scheme approval (section 6). A person must not operate regulated infrastructure except under an operator licence (section 6A). A person must not sell water and sewerage services to small retail customers without a retailer licence (section 6B).

Licence conditions: Operator and retailer licences carry conditions (sections 8E and 8F including conditions imposed by the Act and by IPART). Licensees must comply with all licence conditions.

Access obligations (Part 3): Where an infrastructure service has been declared under Part 3, the owner of the infrastructure must provide access to third parties on commercially negotiated terms, or on terms determined by IPART if the parties cannot agree. The access regime only applies to infrastructure in scheduled areas (section 22) and must meet the declaration criteria (section 23).

Record-keeping and reporting: Licensees must cooperate with IPART compliance audits (section 85A, a condition of every approval and licence).

Works notification and approval (Part 6): Any person must obtain appropriate authorisation before carrying out work that may affect water industry infrastructure.

On-selling prohibition (section 66A): A person other than a public water utility must not on-sell a drinking water service to another person unless the person also supplies a sewerage service and both services are under a single contract. Maximum penalty: 2,500 penalty units for a corporation; 500 penalty units for an individual.

Minister: Grants scheme approvals and licences (or refuses them). May impose, vary, or revoke conditions. May declare additional scheduled areas (section 22(2)). May direct IPART to conduct reviews.

IPART: Compliance monitoring and auditing (section 85). May require compliance audits at any time (section 85A). Reviews approvals and licences at least every five years. Determines prices (under the IPART Act) for licensed services. Arbitrates access disputes under Part 3.

Declared service access regime (Part 3): A party may apply to the Minister (or the relevant authority) for a declaration that an infrastructure service is subject to the access regime. The declaration criteria (section 23) require finding that: the infrastructure is of State significance; it would not be economically feasible to duplicate; access is necessary to promote material competition; safe use is feasible; and access would not be contrary to the public interest.

Directions on IPART (section 85): The Minister may direct IPART to carry out reviews at particular times.

Offences (Part 7):

• Section 66A (illegal on-selling of drinking water): 2,500 penalty units (corporation); 500 penalty units (individual).
• Section 66 (exposure of underground pipes without lawful excuse): penalty provided in the section.
• Operating without approval or licence: penalties in section 6.
• Various other offences for interference with infrastructure, obstruction of meter readers, and breach of conditions.

Part 7A (Enforcement): Provisions for regulatory enforcement including directions, improvement notices, and other compliance tools consistent with modern regulatory frameworks.

Civil remedies: Access obligations under Part 3 are enforceable through the access regime's dispute resolution and arbitration process. Breach of access terms may found civil claims.

Recovery of IPART costs (section 86): IPART's regulatory costs are recoverable from licensees.

Applying for approval and licence:

• Section 7: Application for scheme approval in approved form with required information.
• Section 7A: IPART processes the application and makes recommendations.
• Section 7B: Minister determines the application.
• Section 7C/7D: Scheme approval or operational approval granted with conditions.
• Section 8B/8C: Licence application and determination process.

Review of approvals and licences: IPART must conduct reviews at intervals of not more than five years (section 85(2)) and at any other times directed by the Minister.

Access regime timeline: Declaration process requires application, publication, consultation, and ministerial decision. If declaration is made, the parties negotiate access terms; if no agreement, IPART arbitrates.

Last resort arrangements (Part 5A): Where a retailer fails or loses its licence, the last resort arrangement kicks in to ensure continuity of supply to affected small retail customers.

Sydney Water Act 1994 / Hunter Water Act 1991 / Water NSW Act 2014: The public utility Acts expressly vest ownership of certain infrastructure in those utilities. Section 64(1) and its Note recognise that other Acts may expressly provide for ownership by public utilities, which overrides the general ownership rule.

Real Property Act 1900 (NSW): Section 64(3) overrides the Real Property Act section 42 (indefeasibility) with respect to ownership of water industry infrastructure. This means a Torrens title registered owner of land does not gain an indefeasible interest in the water infrastructure installed in that land by someone else under section 64(1).

Duties Act 1997 (NSW): The Conexa NSWCA case ([2025] NSWCA 20) held that a pipeline owned under section 64(1) constitutes an "interest in land" for the purposes of landholder duty provisions of the Duties Act, despite the WIC Act's novel ownership rights. Paragraph 24 of the judgment explains that "interest in land" in the Duties Act is construed purposively by reference to general law, and the pipeline's status as a fixture (and thus part of the land at general law) meant its statutory ownership constituted an interest in land for Duties Act purposes.

Environmental Planning and Assessment Act 1979 (NSW): Water industry infrastructure projects require planning approval under the EPA Act. The Rosehill Water Recycling Scheme was approved under the EPA Act before the WIC Act licensing framework applied (Conexa case paragraph 6).

National Water Initiative (COAG): The 2006 Act implements the NWI water reform agenda for NSW, providing the regulatory infrastructure for competitive water markets consistent with the national blueprint (Conexa case paragraph 18).

Competition and Consumer Act 2010 (Cth): The Part 3 access regime complements the national access regime under Part IIIA of the CCA, with specific NSW water infrastructure access provisions.

Section 64 ownership does not mean freehold in the land: Under section 64, a private operator who installs a pipeline in land they do not own has property rights in the pipeline as personal property (chattels or a novel statutory interest). However, as the Conexa case confirms, those property rights may constitute an "interest in land" for stamp duty purposes because the pipeline is a fixture at general law, and the WIC Act creates a statutory severance of that fixture while preserving a land-based interest.

Approval is needed before construction, not after: Section 6 requires a scheme approval before constructing, installing, or altering regulated infrastructure. Proceeding without approval is an offence. Many developers assume they can obtain retrospective approval; the Act requires prior authorisation.

Licensed operators cannot necessarily on-sell water separately: Section 66A prohibits on-selling drinking water unless sewerage services are also supplied under the same contract. A developer who wants to provide recycled water separately from sewerage services needs to consider this constraint carefully.

IPART compliance audits can be conducted without notice: Section 85A(3) allows IPART to give notice of an audit "unless the giving of notice would defeat the purpose of the audit." Licensees should maintain ongoing compliance, not only at announced audit times.

Access declarations apply only in scheduled areas: The access regime (Part 3) applies only to water industry infrastructure situated in scheduled areas listed in Schedule 1. Infrastructure outside scheduled areas is not subject to Part 3 access obligations even if it meets the declaration criteria.

Example 1 - Property developer recycled water scheme: A property developer in a new housing estate plans to install a recycled water reticulation system. Under section 6, the developer must obtain a scheme approval from the Minister before constructing the infrastructure. The developer must also hold an operator licence under section 6A before operating the system. If the developer plans to sell water and sewerage services to residents, a retailer licence under section 6B is also required.

Example 2 - Access to significant water infrastructure: A private company wants to supply recycled water to industrial users using an existing pipeline network owned by a public utility. The company applies for a declaration under Part 3 that the infrastructure service is a declared service. If the declaration criteria are met (State significance, not economically feasible to duplicate, access necessary for competition), the public utility must provide access on terms negotiated or arbitrated by IPART.

Example 3 - Stamp duty on pipeline acquisition: A company acquires all the shares in a company that owns a recycled water pipeline. The Chief Commissioner of State Revenue assesses landholder duty on the basis that the pipeline constitutes a "land holding." Following Conexa ([2025] NSWCA 20), the pipeline constitutes an interest in land for Duties Act purposes even though the pipeline's ownership derives from the WIC Act rather than a registered Torrens title. The acquirer will need to pay duty on the assessed value of the pipeline.

Example 4 - Illegal on-selling of water: An industrial estate owner obtains recycled water from a public utility and seeks to on-sell it to tenants for cooling towers without also supplying a sewerage service under the same contract. This breaches section 66A. The maximum penalty is 2,500 penalty units for a corporation.

Example 5 - Last resort arrangements: A licensed water retailer in Sydney's west goes into administration and loses its retailer licence. The last resort arrangement provisions under Part 5A activate to ensure that the retailer's small retail customers continue to receive water and sewerage services while a new arrangements is put in place.